F.A.Q.

Answers some of the most Frequently Asked Questions about the Nucleation Capital venture fund, syndicate, nuclear power and deep decarbonization.

General Questions

Nucleation Capital is a climate-focused venture capital fund that invests primarily in exceptional early and mid-stage private ventures developing technologies in the areas of advanced nuclear and deep decarbonization.

Any accredited individual investor on up to family offices, foundations and large institutional investors can invest. Our first fund (Fund I), an evergreen fund, accepts quarterly subscriptions ranging from $5,000 to $250,000 per quarter, for terms of 4 to 12 quarters. Our second fund (Fund II), a traditional fund launching in 2024, will be suitable for investors seeking to place investments of $1 million and up.

Many other investors bring expertise to investments in renewables, batteries, energy efficiency, etc. We see no reason to compete with them. We bring unique expertise to our investments in nuclear power and energy-powered carbon capture and utilization. Since so few funds invest in these sectors, we think a specialized fund focused narrowly will appeal to a broad array of investors with no exposure to them.

Because we are focused within the deeply technical areas of advanced nuclear and deep decarbonization, we seek the greatest degree of diversity within this narrow thesis. Thus we are technology agnostic, stage agnostic, and geographically agnostic. We will invest in a wide range of vertical supply and support ventures within these sectors. We believe this approach enables us to diversify away considerable uncompensated risk as we construct LP portfolios.

Yes, we send confidential reports on deals done during the quarter, typically once the venture approves public disclosure about their financing. We also post our investment activity later on our Portfolio page.

Nucleation Capital Fund I is a 506(c) fund that requires applying LPs to provide evidence of accreditation. Most traditional venture capital funds are typically 506(b) funds which do not do accredition and therefore are prohibited from public solicitation.

Nucleation Capital is a venture fund investing in private ventures which do not have any public reporting obligations, including for ESG performance. Therefore, we do not fit within an ESG framework, even though we are a fund focused on investing in ventures working to solve climate change.

Absolutely.  An “impact” investment is one made with the intention of generating a positive social or environmental impact alongside a financial return. We invest in ventures which directly or indirectly address solutions to 14 of the 17 Sustainable Development Goals (see numbers 1, 3, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16 and 17).

No. Nucleation is targeting earning top quartile venture capital returns for our LPs as a smaller, boutique venture fund with very specific domain expertise in an area still under-appreciated by most investors.

Yes, a growing number of traditional venture capital funds have begun making investments into nuclear ventures. Most of these have made token investments into fusion. Fewer are willing to invest in fission. Among those that have are DCVC, Union Square Ventures and Founders Fund.

Nucleation Capital Fund I has a ten-year term and charges the standard venture capital fee of 2% annual management fee and 20% “carried Interest” (“carry”). Carry is an incentive fee paid to us after the full repayment of all LP principal is paid from returned proceeds. We provide discounts from time to time.

Ten years is the standard term for a venture capital fund because it typically takes many years for a young venture to build up enterprise value. However, if and when there is a liquidity event (an IPO, merger, SPAC or acquisition, etc.) we will distribute those proceeds back to investors as soon as feasible.

Nucleation’s LPs fund their subscriptions quarterly. Management fees are deducted out of this capital, so there are no further  capital calls in the ordinary course of the fund. Only occasionally could there be extraordinary fund expenses that require a capital call.

Venture Capital avoids double taxation through a partnership structure between the fund managers, called General Partners (GPs) and the fund’s investors, called Limited Partners (LPs). This partnership structure enables both GPs and LPs the right to receive highly favorable tax treatment for returns on invested capital and thus is favored by professional LPs and GPs.

With Nucleation’s Fund I, we allow LPs to cancel ongoing subscription for any reason. If you need to cancel, please contact us and we will put you in touch with an AngelList rep.

Investors interested in Nucleation Fund I may apply through our online subscription portal at AngelList Ventures. There you get access to all our fund descriptive materials, fee information and legal docs. AngelList provides step-by-step instructions which make it very easy. The whole process can take as little as 15 minutes. If you have trouble subscribing, we are available to guide you in that process. For LPs interested in Fund II, our traditional venture fund, please indicate your interest here and we will get back to you.

About Rolling Funds

Rolling funds are a technology-enabled venture capital fund, which has no required end date, so is considered an “evergreen” fund. The platform automates venture administration, reduces legal expenses and thus allows sponsors to offer reduced minimums that can make venture participation more affordable for accredited investors with assets in the single millions.

Rolling Funds enable greater democratization of venture capital—both by allowing more diverse managers to start funds and allowing more investors to invest in such funds. Prior to their introduction in 2020, venture capital was mostly unaffordable for 90% of accredited investors, even though the  “Jumpstart Our Business Startups (JOBS) Act” of 2012 made it legal for accredited investors to invest in private equity.

When you subscribe to Nucleation’s rolling fund (Fund I) you will also get:

  1. A simplified process for selecting your subscription terms and making quarterly funding payments.
  2. An accessible, confidential and automated accreditation process, to protect both investors and the fund as required by the SEC.
  3. A secure online account and investor portal and dashboard to access fund information, reporting and messages.
  4. A custodian that protects your capital and provides both fund administration, accounting and customer support services.
  5. A billing protocol that eliminates most of the uncertainty around funding and eliminates random capital calls.
  6. An offline secure document signing process for those investors who prefer a more standard closing process.

Investors wishing to participate can do so simply by clicking on the subscription link which takes them to the AngelList platform. After reviewing the materials there, an investor can select their subscription level and term and click “Apply.” AngelList will then guide them through a set of screens to set up their account, submit accreditation information and agree to the subscription terms. The fund manager is notified and reviews the subscription application. Once approved, the investor can proceed with funding their account. The whole process can take as little as 10 or 15 minutes or a day or two, depending upon the accreditation process chosen.

Subscriptions are funded directly through the AngelList platform and may be made either through wire transfers or via ACH transfers that are set up through the investor’s bank. Funds are held in the investor’s own funding account within AngelList until the time that their investment is officially closed into the fund.

Those who are new to AngelList need to provide evidence of accreditation, which could be a bank statement, tax return or contact information for their investment manager. AngelList’s fraud prevention team follows “Know Your Customer” (KYC) protocols and may require investors to provide identification information (Legal Name, Address, Social Security Number).

There is no cost to set up an account on the AngelList platform or to be accredited. In addition to Nucleation’s own fees for managing the fund, AngelList charges a fee for the fund’s use of the platform. Nucleation has elected to pay this platform fee itself through the end of 2024, thereby reducing LP fees for its first three years. Starting in 2025, AngelList will deduct this platform fee from LP principal but it will be repaid by proceeds prior to the payment of carry to Nucleation.

Nucleation’s current subscribers get pro rata allocations in all of Nucleation’s deals for each subscribed quarter. They do not get a pro-rata share of any deal funded in prior or subsequent quarters. In the event that uninvested capital rolls over to a subsequent quarter, the LP can receive an allocation in the deals invested in that next quarter, even if not subscribed to that quarter.

Venture funds, including Nucleation, are classified as partnerships for US federal income tax purposes. Investors are Limited Partners (LPs), and treated as a partner of the fund. Partnerships are not subject to US federal income tax at the entity level. Rather, each partner is required to take their share of any taxable event, whether income gain, loss or deduction in the taxable year of the partnership.

About Syndications

An investment syndicate is a group of investors who come together to pool capital to invest in a particular venture. These syndicates use a special purpose vehicle (SPV) created specifically to hold the pooled equity shares. This makes it feasible and lower cost for investors who wish to invest in smaller amounts, into an equity deal. The SPV also simplifies the process of closing a larger number of smaller investors for a venture. Occasionally, Nucleation will float a syndicate to allow our fund investors and our broader LP network to invest more capital into a particular venture. Learn more about the Nucleation Syndicate here.

Any accredited investor can participate in a syndicate. Nucleation offers priority access to its fund LPs to syndicated allocations. Thereafter, Nucleation opens access to our network of AngelList LPs, which are investors who have joined the Nucleation Syndicate. There is no cost to join and participation is open to anyone (including foreign investors) however you still need to be able to meet the US SEC accreditation requirements, whether you are a US citizen or a foreign national.

Yes. You won’t get access to every deal but you will likely get access to any deals that we syndicate. These deals are a one-time option to invest starting as low as $1,000. Access to these allocations are not guaranteed, as many deals are over-subscribed, so there can be very limited equity allocated by the company for this purpose.

Nucleation Capital’s current priority is in investing fund capital in the best deals available. We aim to invest as much capital from Fund I as we deem appropriate first. Then, if there is additional equity available, we may opt to syndicate as well. We only syndicate deals that we have diligenced. In our first two years, we were able to syndicate only 40% of our deals.

Participants in Nucleation’s syndicates do not pay any management fee on that participation but they do pay carried interest (“carry”). Carry for most syndicated deals is 20%. Carry is paid to us only when the deal successsfully returns proceeds to investors. Additionally, all syndicate participants share the legal costs of floating the syndicate. Fund I subscribers get a discount on syndicate carry for any additional capital they choose to put into the deal. 

No. Both rolling fund subscribers and syndicate participants remain confidential and are not disclosed by Nucleation Capital. Cap tables in both cases only list Nucleation Capital. AngelList lists members of a syndicate who have participated in at least one investment on our syndicate page within the private AngelList community. Some investors may also choose to list their participation in the rolling fund or their syndicates as part of their AngelList bios. 

Syndications have been around a long time but technology has only recently made it really affordable and widely accessible. This means that it’s not just the top 1% of high net worth individuals (and professionals in the finance industry) who get access to invest in these kinds of deals. Nucleation Capital is working to build a network that broadens access to more qualified investors, especially those in engineering, energy, management and other non-finance professions.

You can expect to see two or three syndicated deals per year. In contrast, we made an average of five fund investments in our first two years. For better deal access, consider fund participation.

About Nuclear Energy

All of our energy orginates from the Big Bang, which created stars and planets. Mankind has been fortunate that we’ve been gifted with special metals with the ability to fission (split). This phenomena (called nuclear power) produces the greatest amount of heat from the smallest amount of mass. Nuclear fusion (aka, the sun) drives other types of power that we have today.  We hope this graphic helps explain the origins of energy (click to enlarge).

(A single fission event produces ~200,000,000 electron volts of energy. Contrast that with the release of ~2 electron volts produced by the burning of a single hydrocarbon molecule. Burning hydrocarbons releases about 2.5 times its mass in CO2. Fission does not release CO2 and that is why it is widely seen as a key solution to climate change.)

There are dozens if not hundreds of governmental and authoritative groups that endeavor to help people learn the truth about nuclear energy. (Unfortunately, there are also many activist-oriented sites spreading inaccurate information which aim to make people fear nuclear.) Reliable sources include:

People define “advanced nuclear” differently but generally the concept encompasses a very wide range of newer reactor designs that include fission, fusion, subcritical, radioisotope and even low-energy nuclear reactions (LENR) that are being developed this century with the benefit of advanced technologies. Most advanced designs use new materials for coolants and moderators other than water and thus are not like the traditional Light Water Reactors (LWRs) that we currently use. Many of these approaches utilize smaller, modular, pre-fabricated components and are referred to as Small Modular Reactors (SMRs).

Yes, many! We expect that there will be a number of advanced reactor designs made available that energy buyers will be able to select from. These designs will disrupt energy in the following ways:

  1. More styles, sizes and types of technology to pick from to help decarbonize a broader range of energy needs. Thus, advanced nuclear will enter new energy markets than what was previously available to traditional designs.
  2. Some advanced nuclear designs will produce very high-temperature steam that can be used directly for industrial proceses heat, providing a new way to decarbonize industrial processes that have long relied on coal and gas and which cannot use wind or solar.
  3. Some advanced designs will be able to generate energy from spent nuclear fuel—i.e. “nuclear waste”—and turn that into a valuable resource, solving two problems at once.
  4. Modular designs will be largely produced in factories and shipped as prefabricated components to sites, resulting in higher production quality, cost-reducing learning curves, standardized construction designs, faster build times and reduced financing burdens, all of which will bring down costs.
  5. Factory production will enable the industry to build back its workforce, with training and continuous production cycles, and allow integrators to manage  construction at multiple sites, rather than needing expert construction crews for a single construction site. This approach will also yield greater and more enduring economic benefits and job creation.
  6. Rather than ceding the international market to Russia and China, the U.S.’s advanced reactors will improve our competitive ability to export a broader menu of technologies to developing nations and help build stable democracies that are not beholden to our adversaries.

While nuclear innovation has been on the rebound for more than a decade, until recently, news about advancements in the industry rarely received mainstream media coverage. For better or worse, our inability to stem climate change with wind and solar has forced so many more people and governments to consider nuclear as a solution, the once prevalent taboos against discussing nuclear are nearly gone.

We certainly can and should use wind and solar where they are cost-effective. Some places, however, don’t have good wind or abundant sunny weather.  Also, both energy sources are only partial solutions due to their intermittency. It turns out that it costs a lot to provide the back-up power and battery storage necessary to firm renewable power. Nuclear provides clean, reliable power that can complement wind and solar. Here is an animated answer to the question of “Do we need nuclear?”

Several leading advanced nuclear designs are now on track for demonstration units to be completed mid-decade and for quantity production to be available by the end of the decade. Many are already receiving sales commitments and exploring initial sitings. We expect multiple designs to come online in the coming years and considerable private equity activity will begin prior to end of the decade as the energy sector figures out its options. With bolder political leadership and increased pressure on the NRC, these timelines can be improved.

While it would be better if these designs were available now, we are nowhere near meeting the Paris goals of 50% reduction in emissions by 2030, which is a mere six years away. Thus, demand for these reactors will be growing as the dire consequences of climate change become clearer. We think the urgency to end fossil fuel use will be peaking right as advanced reactors begin rolling off production lines at the end of this decade.

Nuclear energy waste is currently a political issue but is not a technical issue. All nuclear waste from power production is safely stored, funded and has virtually no impact. There are a range of advanced options that can provide even lower-cost permanent storage (such as Deep Isolation’s deep geologic boreholes) and/or reprocessing and reuse of this waste as fuel. In stark contrast, fossil fuels’ waste—toxic chemicals, particulants and carbon emissions—have been shown to cause almost half of all air pollution deaths, an estimated 4 million premature deaths, plus are heating our climate. That’s the biggest waste issue humanity has. Nuclear provides a vital solution.

Of course, but that is the same for any new technology. No one has ever said that the high cost of the first prototyped iPhone means that there won’t be a market for the product. All technologies see declining costs as production numbers increase. Advanced nuclear, because of its smaller sizes and modular construction, will travel down the cost curve much more quickly than the prior generation of power plants, each of which were infrastructure projects. Advanced nuclear power using enriched fuel can become one of the least-cost energy sources available. Regardless, studies have shown that the existence of firm clean power on any grid with intermittent renewables will make the total cost of decarbonization cheaper on an all-in basis.

We have ~10,000 years of nuclear fuel available from known uranium resources, including a considerable amount dissolved in sea water. Experts have estimated that there is as much as 1,000 years of energy locked up in the unused fuel that remains in nuclear “waste.” Decommissioning all nuclear weapons can supply several hundred years worth of power, as demonstrated by the “Megatons to Megawatts” program implemented in the 90s. Then, there is thorium, another common mineral which is fertile, that can be used to augment uranium fuel supplies.

That remains unknown. Fusion researchers are making progress but slowly. This has raised expectations and funding levels. However claims of “net energy” (more energy out than in) from fusion are widely misconstrued and overstated. Fusion has never produced a usable amount of electrons for any grid, despite many decades of rigorous research efforts. Many don’t expect it to come online until the 2050s or 2060s. We cannot afford to bank on this technology being available to help us reduce emissions by 2050.

LENR is a third type of nuclear energy which has eluded precise scientific definition. Now, three decades along, scientists have a much greater understanding of the phenomena that involves metallic lattices and complex multi-body interactions by which a burst of energy is generated. Variously called Low Energy Nucear Reactions (LENR), Solid State Nuclear or Lattice Confinement Fusion (LCF), there are more than 100 initiatives and groups, including NASA and the DOE, engaged in this research.

About Deep Decarbonization

Deep decarbonization is a term that covers and a whole range of existing an new approaches, methods and technologies for removing carbon dioxide (CO2) from the atmopshere and doing something else with the molecule or, specifically, the carbon part of that molecule.  We have not yet successfully stopped emitting new amounts of CO2, so there is still an upward trajectory of the levels of CO2. Deep decarbonization contemplates using “negative emissions” technologies to capture, utilize or sequester CO2 after it has been released into the atmosphere and oceans, as another critical mechanism to try to prevent the worst climate impacts from happening.

Because of humanity’s habit of burning fossil fuels for energy—which releases carbon dioxide as its waste product—the amount of carbon dioxide in the atmosphere is rising faster than any other time in the past 66 million years.  Today, CO2 has reached levels not seen in at least the past 800,000 years, which is causing our atmosphere to heat up very quickly. According to analysis done by Dr. James Hansen and his team at the Columbia Earth Institute, accumulated CO2 has effect of generating excess atmospheric heat equivalent to 750,000 atomic bombs per day, every day. While the challenge of making a wholesale shift away from burning the types of fossil fuels that release CO2 continues to elude us, there are things that we can do to try to mitigate the damage being done by removing increasing amounts of free CO2 so that it cannot function as a heating mechanism in the atmsophere.

This is from Climate.gov’s  “Climate Change: Atmospheric Carbon Dioxide” page:

“Based on preliminary analysis, the global average atmospheric carbon dioxide in 2020 was 412.5 parts per million (ppm for short), setting a new record high amount despite the economic slowdown due to the COVID-19 pandemic. In fact, the jump of 2.6 ppm over 2019 levels was the fifth-highest annual increase in NOAA’s 63-year record. Since 2000, the global atmospheric carbon dioxide amount has grown by 43.5 ppm, an increase of 12 percent.”

“CDR” stands for Carbon Dioxide Removal and contemplates one or more methods for capturing CO2 and rendering it harmless to our atmopshere. “DAC” is Direct Air Capture and involves capturing the CO2 from the air as one method for achieving CDR.

“Net Zero” is an approach to dealing with carbon emissions that recognizes that while we are working to shift to clean sources of energy, we will be continuing to emit CO2. So we need to use CDR methods to draw down the amount of carbon dioxide in the atmosphere as fast or faster than human activity is forcing it up.

Here is a chart listing the most common and most promising negative emissions technologies:

The following is a depiction of the various industrial and commercial uses for CO2 or C, converted from CO2:

Here is a list some of the resources that can give you a better sense of where things are:

  1. CDR.fyi’s 2024+ Market Outlook Summary Report
  2. DOE announces $100 million in funding for pilot of CDR technologies.
  3. PR Newswire’s summary of the Carbon Dioxide Removal Market, January 2024
  4. NORIs 2021 Carbon Removal Recap podcast.
  5. Microsoft shared lessons learned and insights on purchasing carbon removal credits through the publication of a white paper.
  6. This scientific paper looks at integrating direct air capture (DAC) with small modular nuclear reactors.
  7. Mother Jones critical look at the hype surrounding carbon removal, “Is Sucking Carbon out of the Air the Solution to Our Climate Crisis? Or just another Big Oil boondoggle?
  8. Ten New Insights in Climate Science 2023/2024
  9. ClimateWorks published a report on how to decarbonize concrete, the world’s most used building material.
  10. Kennedy School’s Belfer Center’s Prospects for Direct Air Carbon Capture and Storage: Costs, Scale and Funding